Definition of consolidating credit card debt
" It's one of the most popular personal finance questions on Google.Here's what you need to know to pay off your credit card debt faster.But let’s be honest: Your interest rate isn’t the main problem. This specifically applies to consolidating debt through credit card balance transfers.The enticingly low interest rate is usually an introductory promotion and applies for a certain period of time only. Be on guard for “special” low-interest deals before or after the holidays.Think about that for a second: if you are carrying credit card debt, the interest rate on your credit card can be more expensive than all your other types of consumer debt.Second, credit card debt is considered variable interest debt, which means the interest rate can change.Something has to change, and you’re considering debt consolidation because of the allure of one easy payment and the promise of lower interest rates. But the truth is debt consolidation loans and debt settlement companies suck even more. In fact, you end up paying more and staying in debt longer because of so-called consolidation.
First, the interest rate on your credit card can be higher than the sum of the interest rates on your student loans, mortgage and auto loan.
With a strong credit profile, if you can consolidate your credit card debt with a personal loan at a 7% interest rate and three-year repayment term, you will save ,634 and pay off your credit card debt earlier.
While your interest rate may be different, your goal is to receive an interest rate lower than your current interest rate.
You can consolidate your credit card debt with a personal loan, which is also known as a credit card consolidation loan.
With a personal loan, you can consolidate your existing credit card debt into an unsecured personal loan that is typically repayable in 2 to 7 years.